Greenpro Capital Corp. — FY2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022; filed March 31, 2023. Greenpro provides cross-border advisory, corporate and accounting services, and invests in and leases or sells commercial real estate. Its principal operations are in Hong Kong, China and Malaysia. The filing reports annual results, not standalone fourth-quarter figures.
Financial results and liquidity
| Metric | FY2022 | FY2021 |
|---|---|---|
| Revenue | $3.674 million | $2.950 million |
| Gross profit | $2.650 million | $2.477 million |
| Gross margin | 72.2% | 84.0% |
| Operating loss | $1.519 million | $2.755 million |
| Net loss | $6.262 million | $14.363 million |
| Net cash used in operating activities | $2.403 million | $2.023 million |
| Cash and cash equivalents | $3.912 million | $5.339 million |
| Total assets | $15.639 million | $22.711 million |
| Total liabilities | $3.061 million | $3.672 million |
- Revenue rose 24.6%. Service revenue declined to $2.725 million from $2.821 million; rental revenue fell to $108,495 from $128,830. The increase came mainly from $840,036 of sales of three Hong Kong property units, versus no property sales in 2021.
- Gross profit increased, but gross margin declined as property-sale costs were added. General and administrative expense fell to $4.169 million from $5.232 million, contributing to the narrower operating loss.
- The net loss narrowed mainly because FY2021 included $12.951 million of interest expense and a $3.521 million loss on extinguishment of convertible notes; neither was recorded in 2022. FY2022 nevertheless included $4.208 million of investment impairments, $606,250 of impairment of a related-party receivable, and $263,247 of goodwill impairment.
- Operating cash outflow increased from $2.023 million to $2.403 million. Investing activities provided $836,170 and financing activities provided $135,421 in 2022. Cash declined by $1.427 million during the year.
- At year-end, current assets were $5.288 million and current liabilities $3.061 million, implying working capital of about $2.228 million. Current liabilities included $1.834 million of deferred revenue. The balance sheet reports no convertible notes payable; lease liabilities were $18,725 current, with approximately $220,528 of future minimum rental payments disclosed for the leases.
Changes, outlook and material risks
- Other investments fell to $5.406 million from $9.622 million, reflecting impairments and write-offs. Notable 2022 valuation reductions included First Bullion Holdings ($2.044 million impairment), Innovest Energy Fund ($1.532 million), and New Business Media ($329,120). The company fully impaired its Adventure Air Race investment. The auditor identified investment impairment valuation as a critical audit matter.
- Management expects business-services revenue to improve as it expands into new territories and rental income to remain stable. It anticipates property-sale revenue and related costs will fluctuate. The filing provides no quantified revenue, earnings or cash-flow guidance.
- Going concern: The auditor and management state that the net loss and operating cash outflow raise substantial doubt about the company’s ability to continue as a going concern within one year after the financial statements were issued. Management relies on improved profitability and continuing shareholder support or external financing; neither financing availability nor acceptable terms are assured. The statements include no adjustments for a possible inability to continue as a going concern.
- Contingency: Millennium Fine Art alleges breach of an NFT contract and seeks $66 million in damages, specific performance and fees. Greenpro denies the allegations. Arbitration was stayed in November 2022 while the parties pursued mediation; the filing does not state a clear resolution or quantified accrual.
- Related-party service revenue was $665,203; related-party G&A expense was $193,802. The company also reported substantial impairments involving related-party investments and receivables. It says related-party transactions are generally conducted at arm’s length.
- Three customers generated 28% of 2022 revenue, while three customers represented 84% of year-end accounts receivable. Other risks include foreign-exchange exposure, operations and regulation in Asia, data and cybersecurity rules, and possible changes to PRC overseas-listing requirements. The company says it was not identified as an HFCAA Commission-Identified Issuer; its auditor is based in Malaysia.
- Nasdaq notified the company in January 2022 that it was below the $1 minimum bid-price requirement; the company regained compliance in August 2022. A 10-for-1 reverse stock split took effect July 28, 2022. The company reported effective disclosure controls and internal control over financial reporting; the auditor did not express an opinion on internal controls.
Most important facts for investors to verify
- Whether operating cash burn can be reduced and what concrete funding sources support management’s going-concern assessment.
- The recoverability and valuation assumptions for the remaining $5.406 million investment portfolio, including related-party exposures and prior impairment estimates.
- The status, potential exposure and accounting treatment of the Millennium Fine Art arbitration and mediation.
- Whether service revenue can resume growth and sustain margins without reliance on intermittent real-estate sales.
- Customer receivable concentration, collectability, related-party balances, and compliance with applicable PRC and other regional regulatory requirements.